CEIBA Investments Limited

An update from our investment manager, Sebastiaan Berger - Friday 2 October 2020

On 29 September 2020, CEIBA Investments Limited (“CEIBA” or the “Fund”) published its results for the six months to 30 June 2020. The NAV per Share at 30 June 2020 was US$1.29 (104.3p) compared to US$1.50 (114.5p) at 31 December 2019 and the loss in the first six months of the financial year was US$0.21 (17.3p) compared to a loss of $0.04 (2.9p) for the same period last year.  Although the valuation of assets of the Fund as well as earnings in respect of the six months ended 30 June 2020 have clearly been negatively impacted by the Covid-19 pandemic, the results were perhaps not as bad as one would have expected.  If one discards the change in fair values of the assets of the Fund, the result of the Fund over the reporting period was US$2,636,154 (positive), as a result of the fact that during the first half of 2020, the Fund received US$6,884,559 million in dividend income from its Cuban joint ventures. 

The Manager and the Board are optimistic that the valuations could see positive results when the situation with respect to Covid-19 is normalized and that there are other positive factors that may in the months ahead potentially have a strong impact on the present level of volatility in the valuations.  These factors include the possible election of Joe Biden in the Presidential elections in the United States in November of this year as well as ongoing reform efforts of the Cuban government, which we hope will result in improvements to the economic conditions under which the Cuban joint venture companies operate. Of course, the fact that Donald Trump tested positive for the coronavirus may have a huge impact on the U.S. Presidential elections.  

Pleasingly, during the first six months of 2020, the Fund’s largest asset - the Miramar Trade Centre, in which it holds a 49% interest – operated at almost full occupancy levels, with income and net profits ahead of those achieved during the same period last year.  With regard to the hotel interests of the Company, the Meliã Habana has remained open throughout the pandemic with a skeleton capacity of 30 rooms and one semi-functional restaurant providing take-away meals.  All of the other hotels, which are located in Varadero, were closed at the end of March and only one has partially reopened since then.  Meliã, the operator of each of the hotels, has recently put forward proposals whereby the Sol Palmeras hotel and the Meliã Habana will continue to operate at very modest occupancy levels until the end of the year.  It is not anticipated that the other two hotels within Miramar - the Meliã Varadero and the Meliã las Americas - will reopen during the present year.  

Progress on the construction of the beachfront hotel near Trinidad being undertaken by TosCuba, in which the Fund has a 40% interest, has advanced steadily throughout the year and all of the structural works are now complete. Nevertheless, the project is behind schedule as a result of delays in the delivery of imports caused by the Covid-19 pandemic and other factors.  Negotiations to amend the turn-key construction contract are ongoing on the basis of extending the capital expenditure programme and spreading out the disbursement schedule over a longer timeframe. This would imply that the hotel would begin operations in Q4 2021.